Hansgrohe Group: Mixed Results for 2023 Fiscal Year

Negative Developments in Construction Industry also Affect Hansgrohe

Schiltach, April 11, 2024. "The 2023 fiscal year has put a damper on the entire bathroom and sanitary industry. After our record results in 2021 and 2022, the past year was very challenging for the Hansgrohe Group," Hans Juergen Kalmbach, Chairman of the Hansgrohe Executive Board, explains at the annual press conference. As one of the leading suppliers of premium and designer products for bathrooms and kitchens, the company from Schiltach/Black Forest achieved a total turnover of €1.406 billion in 2023.* Compared to the previous year, this represents (€1.550 billion) a decline of minus 9.3 percent. Adjusted for currency effects, turnover was 6.2 percent below the previous year. The operating result fell to €201.7 million, a minus of 18.3 percent compared to 2022 (€246,8 million). The resulting sales/earnings ratio therefore also fell to 14.3 percent (2022: 15.9 percent). The decline in EBITDA of €256.8 million (2022: €296.0 million) represents a minus of 13 percent. Ongoing investments in growth areas such as the new manufacturing site in Serbia and numerous product innovations resulted in an EBITDA margin of 18.3 percent (2022: 19.1 percent).

"In light of the economic developments, particularly in the construction sector, the course of business in 2023 is, despite everything, satisfactory for us; after all, it is the second most successful financial year in our company's history," Hansgrohe CEO Kalmbach summarizes. "I would particularly like to emphasize the great flexibility of all our employees at all sites. Thanks to their willingness to adjust their working hours and use their time accounts, we were able to respond to the change in demand without having to be on short hours;" says Kalmbach, "therefore, I would like to express my sincere thanks to the international Hansgrohe team on behalf of my colleagues on the Executive Board."

Sales Growth Halted

The Hansgrohe Group is well positioned on the international markets, supplying faucets, showers and bathroom accessories to over 150 countries. Despite the subdued construction sector, the company was able to record successes in the project business. Markets such as Turkey, India, Mexico and the regions of Southeast Asia and the Middle East also showed extremely positive developments. Nevertheless, Hansgrohe was unable to continue the growth trend of recent years in most countries in 2023 due to the global economic conditions. The decline in sales is primarily attributable to its core markets, Germany and China. The Black Forest-based manufacturer and supplier of sanitary ware continues to generate the largest sales share of €329.8 million in the domestic market. Domestic sales decreased by 14.7 percent (2022: €386.8 million). Sales abroad declined by 7.5 percent in the past fiscal year. Adjusted for currency effects, the decline in foreign business was 3.4 percent. Last year, the Hansgrohe Group generated 76.5 percent of its turnover abroad (2022: 75 percent).

Employee Development in Numbers

In 2023, the Hansgrohe Group employed 5,448 people worldwide (2022: 5,639). Of these, 3,419 (2022: 3,554) were employed in Germany at the time of reporting on December 31, and 2,029 (2022: 2,085) at the Hansgrohe Group's international locations. Due to the foreseeable decline in sales, Hansgrohe adjusted the employee cost structure during the past fiscal year using socially compliant HR measures. Most of the reduced positions resulted from not re-staffing vacancies, and from the implementation of attractive retirement offers.

Continuous Investment in Innovation, New Products, Sustainability and IT Security

Investments made in 2023 amounted to €81.6 million (2022: €89.2 million), the second-highest amount in the company's history. In the previous five years (2018-2022), annual investments averaged €52 million. Despite the declining market and a negative impact on earnings, Hansgrohe invested €81.6 million in national and international projects. A large part of this went into the new production site in Serbia, which was officially opened in June 2023, and which exclusively manufactures hansgrohe-branded faucets. With it, the Hansgrohe Group strengthens and optimizes its European production network. Also in June 2023, the globally active company opened the Hansgrohe InnovationParc in Shanghai. In addition to an exhibition space for visitors, the InnovationParc also offers areas for the company's own research and development work in the region. Hansgrohe therefore solidifies its local innovation management and product development for the Chinese and Asia-Pacific regions. With this investment, Hansgrohe has laid the foundations for future growth in these markets.

The company also invested continuously in expanding and updating its product range. At the ISH, the world's leading trade fair for water, heat and air, Hansgrohe presented, for the first time in its history, a product portfolio supplemented by sanitary ceramics and bathroom furniture under its premium brand, hansgrohe. Other important new products from hansgrohe included the enhanced "iBox Universal 2" concealed system, the new "Tecturis E+S" faucet range and the completion of the "Pulsify E+S" shower ranges. AXOR presented the "AXOR ShowerComposition" shower program, the "AXOR Drain" drainage channels, and the "AXOR Suite" washbasins and bathtub.

Another aspect of the investments is the implementation of a group-wide sustainability strategy in various areas, from production to product development. The German sites have been climate-neutral since 2021**. Since the end of 2022, all production sites worldwide have switched to green electricity and all global sites have also achieved climate neutrality in terms of direct emissions and energy consumption. The Black Forest-based company received numerous awards in 2023 for all its previous initiatives to integrate sustainable action and management into its corporate strategy. Particularly noteworthy is the German Sustainability Award 2024 in the sanitary technology category. With "Hansgrohe's Green Vision Beyond Water", Hansgrohe presented its vision of a bathroom that requires up to 90 percent less water and up to 90 percent less energy compared to a conventional bathroom, therefore also generating up to 90 percent less CO2e emissions. Hansgrohe received the German Innovation Award for this concept study. Other awards included third place in the Baden-Wuerttemberg Environmental Technology Prize for the in-house development of a plastics recycling machine at the Offenburg site, second place in the Sustainability Impact Award, and the German Federal Ecodesign Prize for hansgrohe’s "Pulsify Planet Edition" hand-held shower.

Further investments were made in tools for new products, in machinery and equipment, as well as in information technology and the security of digital processes.

Outlook for 2024

"It was virtually impossible to make a reliable forecast last year, and this also applies to 2024;" says Hansgrohe CEO Hans Juergen Kalmbach, "the only thing that is certain is that we are all facing immense challenges. The economic and geopolitical environment remains uncertain, and market conditions are changing at ever shorter intervals. We are therefore planning for the current fiscal year with commercial prudence, and we continue to take a long-term view." The company does not expect an immediate return to the usual growth in 2024 but anticipates a sideways movement of the sales curve. The Hansgrohe Group will continue to rely on its innovative strength and the flexibility of its teams and corporate structures. Even during the coronavirus pandemic, the company has successfully demonstrated that crises also create opportunities, but these must be seized. "Compared to some other players in the sanitary industry, Hansgrohe is doing well," says Kalmbach. However, it is important not to rest on past successes. The order of the day is "don’t whine, act flexibly". Hans Juergen Kalmbach is convinced: "We can counteract the crisis with the greatest possible adaptability. This will create the right conditions for us to continue to invest and grow profitably. In doing so, we are relying on the wealth of ideas and flexible deployment of the Hansgrohe teams around the world. So, we are positioning ourselves for the future and, together with our market partners, creating the basis for profitable growth in the coming years."

About the Hansgrohe Group – Setting the Beat of Water. Since 1901.

With its brands AXOR and hansgrohe, the Hansgrohe Group, based in Schiltach/Southern Germany, enjoys a reputation as a leader in innovation, design and quality within the bath and kitchen industry. Founded in 1901 in the Black Forest, the company gives water form and function with its faucets, showerheads and shower systems. In combination with sanitary ceramics and bathroom furniture, the company offers individual design options from a single source for holistic bathroom experiences. The 123-year history of the company is marked by innovations, such as the first hand-held shower with multiple spray types, the first pull-out kitchen faucet, and the first wall bar to hold a hand-held shower.The company holds more than 20,000 active property rights. The Hansgrohe Group stands for long-lasting quality products and for responsibility towards people and the environment. Sustainable production of resource-conserving products is central to the company’s business activities around the globe. By developing innovative technologies for faucets and showers, Hansgrohe achieves the greatest possible effect on protecting water as a resource and limiting and adapting to climate change during the usage phase of its products. As part of its consistent sustainability strategy, Hansgrohe is equipping all water-bearing products exclusively with water-saving technologies by 2030 within its "ECO 2030" initiative. With 35 subsidiaries and 21 sales offices supplying products in more than 150 countries, the globally active company in the sanitary industry is a reliable partner to its customers in all regions of the world. The Hansgrohe Group, its brands and products have won numerous awards, including more than 700 design prizes since 1974. The products of the Hansgrohe Group are found around the world: on renowned cruise ships, in luxurious 5-star and boutique hotels, in international metropolitan cities, in extraordinary spas, exclusive bathrooms of lodges and luxury villas, public facilities, as well as in countless private homes. The Hansgrohe Group’s high quality standards are ensured by eight wholly-owned production facilities: four in Germany, one each in France, in Serbia, the United States and China. In 2023, the Hansgrohe Group generated a turnover of EUR 1.406 billion. It employs around 5,400 people worldwide, about 60 percent of whom work in Germany.

* All balance sheet figures in accordance with the German Commercial Code

** Climate neutrality refers to greenhouse gas emissions from Scope 1 and 2 (direct emissions and energy consumed at the sites) according to the Greenhouse Gas Protocol. Wherever possible, the Hansgrohe Group actively reduces these emissions. The remaining emissions are offset through recognized, certified climate protection projects. For more information, please visit https://www.hansgrohe-group.com/en/about-us/sustainability